29 Jun 2021
Posted in Banking
COVID-19 pandemic enables top payment companies to achieve improved top-lines based on upscaled transaction volumes, says GlobalData
The COVID-19 pandemic accelerated the acceptance of digital payments across the globe in 2020, which rendered an improvement in the top-line performance of the majority of the top 20 public payment companies despite unprecedented economic slowdown, says GlobalData, a leading data and analytics company.
Over the previous year, the companies that recorded impressive top-line growths were Square, Global Payments, Fiserv, Adyen, PayPal, and Worldline, growing more than 15%.
Parth Vala, Company Profiles Analyst at GlobalData, comments: “Square’s growth was attributed to its exceptional growth in bitcoin revenue and revenue from subscription and related services. In addition, the company has been witnessing consistent growth in its transaction-based revenue over the past few years. Its gross payment volume reported a compound annual growth rate (CAGR) of 22.6% over the past five years (2016-2020), reaching $112.3bn in 2020.”
Growth recorded by Global Payments, Fiserv, and Worldline were mostly inorganic, with additional revenue streams from acquired businesses, TSYS, First Data, and Ingenico, respectively.
Adyen’s annual transaction processed volumes have been growing steeply, reaching €303.6bn in 2020, reporting a year-over-year (y-o-y) growth rate of 26.7% and a CAGR of 46.3% over the past five years. Growth translated into a greater increase in settlement and processing fees, and revenue from foreign exchange service fees and third-party commissions.
PayPal’s payments transaction volume reached 15.4 billion in 2020, reflecting an increase of 24.2% over 12.4 billion, a year ago. Its total payment volume reached $936.1bn from $711.9bn, representing a y-o-y growth rate of 31.5% and 27% CAGR over the past five years, which translated into overall revenue growth of 20.7%.
The remaining players reported marginal dips in their revenue streams. The most noteworthy were Cielo and American Express.
Cielo’s revenue dip was owing to a 5.7% decline in its financial transaction volume, which stood at R$644bn in 2020. There was a 13.5% decline in the number of payment transactions, which reached 6.2 billion from 7.1 billion in the previous year, caused mainly by a 19% drop in the number of credit card transactions.
American Express’s billed business transaction volume dropped by 19% to $1,010.6bn from $1,240.8bn in the previous year, mainly because of a 21% decline in its proprietary commercial billed business and a 17% fall in its proprietary consumer billed business.
Vala concludes: “Though the aggregate revenue growth of the top 20 payment companies was a nominal 2.72%, it emphasizes the fact that the global digital payment sector holds tremendous growth potential with enhanced consumer faith over the previous year, albeit largely it was pandemic-forced as consumers were obliged to transition away from cash.”